What is Form 24Q?

Form 24Q is a quarterly TDS (Tax Deducted at Source) return filed by employers for tax deducted on salary payments under Section 192 of the Income Tax Act. Every organization—company, partnership, proprietorship, LLP, or government body—that pays salaries and deducts TDS must file Form 24Q without fail.

This return ensures that the correct tax credit reflects in employees' Form 26AS/AIS, and it forms the basis for generating Form 16 at year-end. Unlike other TDS returns (such as Form 26Q or 27Q), the deduction under Form 24Q depends on the employee’s annual projected tax liability, not a flat percentage rate.

Why Form 24Q is Important

Form 24Q plays a crucial role in ensuring accurate TDS reporting for employees. It allows the Income Tax Department to track:

• Salary payments made to employees
• Month-wise TDS deductions
• Employee-wise tax calculation
• Chosen tax regime (Old or New)
• Total deductions and taxable income

By maintaining precise quarterly records through Form 24Q, employers help ensure smooth issuance of Form 16, accurate reflection of tax credits in Form 26AS/AIS, faster refund processing, and overall compliance for both the organization and its employees.

Structure of Form 24Q

Form 24Q is divided into specific sections called annexures, and depending on the quarter of filing, employers may need to submit up to three annexures. Each annexure serves a unique purpose and helps the Income Tax Department track salary-related TDS accurately.

1. Annexure I (Filed Every Quarter)

Annexure I is the core part of Form 24Q and must be filed for all four quarters of the financial year. It contains quarterly information about salary payments and TDS deductions. It includes:

• Employer Details: TAN, PAN, legal name, and complete address
• Challan Information: BSR code, challan number, date of deposit, and TDS amount deposited
• Employee Salary & TDS Details: Name, PAN, date of payment, salary amount, TDS deducted
• Reasons for NIL / Low Deduction: If TDS was not deducted or deducted at a lower rate, the employer must explain the reason

This annexure ensures the government can verify monthly TDS deductions and challan deposits made by the employer.

2. Annexure II (Filed Only in Q4)

Annexure II is submitted only in the 4th quarter (January–March). It provides the complete annual salary computation for every employee. It includes:

• Total Salary Breakup: Basic, allowances, bonus, incentives
• Exemptions: HRA, LTA, and other Section 10 exemptions
• Deductions: 80C, 80D, and other Chapter VI-A claims
• Other Income: Income declared by the employee (e.g., interest, rental)
• Final Tax Liability: Total taxable income and total tax payable
• Tax Regime: Whether the employee chose the Old or New tax regime

Annexure II is essential for generating Form 16, making it one of the most important parts of the return.

3. Annexure III (Filed Only in Q4 by Select Entities)

This annexure applies only to specific employers, mainly banks and notified institutions. It is used to report details of pension payments and related income. It includes:

• Pension income
• Interest income
• House property income (if declared)
• Total taxable income and corresponding TDS

Annexure III ensures transparency and accurate reporting of pension-related TDS.

TDS Section Codes Used in Form 24Q

Impact of the New Tax Regime (Section 115BAC)

The introduction of the New Tax Regime has changed how employers must calculate TDS and report details in Form 24Q. Since employees can now choose between the Old and New tax regimes, Form 24Q needs to clearly reflect which regime each employee has selected.

Here are the key points to understand:

• Employees Must Declare Their Choice: At the start of the year, employees must tell their employer which regime they want.
• Default Regime: If an employee doesn’t inform the employer, the New Tax Regime is automatically applied.
• Limited Deductions: Under the new regime, most deductions/exemptions like HRA, 80C, 80D, LTA, etc., are not allowed (except a few specific ones).
• Reporting Required in Q4: Employers must mention the employee’s chosen regime in Annexure II of the Q4 return.
• Direct Impact on TDS: The selected regime affects how much tax is calculated and deducted throughout the year.

Due Dates for Filing Form 24Q

Timely filing avoids penalties and ensures Form 16 is issued on time.

TDS Deduction & Deposit Rules

TDS on salary must be deducted at the time of actual payment, not when the salary becomes due. After deduction, employers must deposit the TDS within the specified deadlines.

Deposit Due Dates:

• 7th of the next month for deductions made from April to February
• 30th April for TDS deducted in March

TDS must always be deposited before filing Form 24Q.
After depositing, the employer must prepare the quarterly return and upload it on the TRACES/TIN-NSDL portal using a validated file generated by the File Validation Utility (FVU).

Penalties & Interest for Non-Compliance

Employers can avoid Section 271H penalties if they pay all dues and file within 1 year of the due date.

Higher TDS if Employee Doesn’t Provide PAN

If an employee fails to provide a valid PAN, the employer must deduct TDS at a flat 20% rate under Section 206AA. This applies even when the employee’s actual tax slab is lower. It may also delay Form 16 accuracy and refund processing.

Conclusion

Form 24Q is one of the most important compliance documents for employers. Filing it correctly ensures employees receive accurate Form 16, avoids penalties, and keeps your organization fully compliant with the Income Tax Act. Whether you’re a small startup or a large corporation, maintaining timely and error-free Form 24Q returns is essential.